New Economics Papers
on Law and Economics
Issue of 2013‒03‒23
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Lawyers as Agents of the Devil in a Prisoner's Dilemma Game: Evidence from Long Run Play By Ashenfelter, Orley; Bloom, David E.; Dahl, Gordon B.
  2. Effects of Welfare Reform on Women’s Crime By Hope Corman; Dhaval M. Dave; Nancy E. Reichman

  1. By: Ashenfelter, Orley (Princeton University); Bloom, David E. (Harvard University); Dahl, Gordon B. (University of California, San Diego)
    Abstract: Do the parties in a typical dispute face incentives similar to those in the classic prisoner's dilemma game? In this paper, we explore whether the costs and benefits of legal representation are such that each party seeks legal representation in the hope of exploiting the other party, while knowing full well that failing to do so will open up the possibility of being exploited. The paper first shows how it is possible to test for the presence of such an incentive structure in a typical dispute resolution system. It then reports estimates of the incentives for the parties to obtain legal representation in wage disputes that were settled by final-offer arbitration in New Jersey. The paper also reports briefly on similar studies of data from discharge grievances, court-annexed disputes in Pittsburgh, and child custody disputes in California. In each case, the data provide evidence that the parties face strong individual incentives to obtain legal representation which makes the parties jointly worse off. Using our New Jersey data, we find that expert agents may well have played a productive role in moderating the biases of their clients, but only early on in the history of the system. Over time, the parties slowly evolved to a non-cooperative equilibrium where the use of lawyers becomes nearly universal, despite the fact that agreeing not to hire lawyers is cheaper and does not appear to alter arbitration outcomes.
    Keywords: prisoner's dilemma, arbitration, lawyers
    JEL: J52 K0
    Date: 2013–02
  2. By: Hope Corman; Dhaval M. Dave; Nancy E. Reichman
    Abstract: We investigate the effects of broad-based work incentives on female crime by exploiting the welfare reform legislation of the 1990s, which dramatically increased employment among women at risk for relying on cash assistance. We find that welfare reform decreased female property crime arrests by 4–5%, but did not affect other types of crimes. The effects appear to be stronger in states with lower welfare benefits and higher earnings disregards, and in states with larger caseload declines. The findings point to broad-based work incentives—and, by inference, employment—as a key determinant of female property crime.
    JEL: H53 I3 J22 K42
    Date: 2013–03

This issue is ©2013 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.